Illegally logged timber in north-eastern Brazil. The coalition has dropped a pledge to introduce measures to make the import or possession of illegal timber a criminal offence in the UK. Photograph: Paulo Santos/Reuters

The coalition is being accused of reneging on two of its key environment pledges in a further blow to the credibility of David Cameron's promise to lead the "greenest government ever".

In correspondence from a government minister to the Green MP Caroline Lucas, the government makes clear it will not honour a pledge to make it a criminal offence to posess, or bring into the country, illegal timber. Campaigners say such legal measures are necessary to help curb the 350m-650m square metres of forest that is illegally logged every year – possibly as much as 40% of the total market.

In a second policy turnaround, both the Lib Dems and Tories promised before the election to extend the green subsidy for energy from small-scale solar panel installations to around 6,000 people who had put up panels before the launch of the government subsidy scheme. Last week Chris Huhne, the climate and energy secretary, made clear that the coalition would not extend the scheme and such early adopters would have to be content with the "warm glow of being pioneers".

Green campaigners are likely to be especially disappointed by the apparent dropping of more stringent measures on illegal timber however, because the coalition document explicitly committed the two parties to introducing "measures to make the import or possession of illegal timber a criminal offence."

But Jim Paice, minister for agriculture and food, has now told Lucas the government will not move beyond propsed EU legislation on timber import and "will not be pursuing further UK legislative action at this stage." That means any move to make possession of illegal timber a criminal offence has been effectively ruled out.

After the US made the import of illegal timber illegal last November, the then shadow foreign secretary, William Hague, promised a Tory government would pass UK legislation on top of any strengthened EU directive. He said such efforts would "send a message to the rest of Europe that we are ready to lead on closing the market to illegally timber" and criticised the then environment secretary, Hilary Benn, for failing to pledge the same.

In letters to Lucas and other backbenchers, Paice wrote: "Colleagues across the EU have come together to agree a strong and proportionate response and I am confident that the EU regulation with the first placing prohibition will stop illegal timber from coming on to our market. As such, our focus must now be on implementation."

"We should also recognise that much illegal timber comes into the country through negligence rather than deliberate criminal activity, and we anticipate that this negligence will be stamped out by the regulation. In a letter to another backbencher, Paice said: "In these difficult financial times, we need to focus on the principles of better regulation. There is little to be gained by initiating additional (and duplicative) UK legislation in this area and we must be wary of creating a disadvantage in our timber's trade's efforts to act as world leaders in the procurement of legal timber.

The EU legislation makes it an offence to place illegal timber on the market but does not make it an offence for anyone further down the supply change to handle illegal timber and that is why campaigners believe the UK government still needs to act. In his letters Paice acknowledges the EU legislation is "only the first step".

Lucas said: "It is deeply disappointing that a government that has an aspiration to be the 'greenest government in history' has fallen at the first hurdle. Deforestation is a key driver of climate change and they have flunked this test."

Charles Hendry, the Conservative MP who is now minister of state at the Department for Energy and Climate Change (DECC), also wrote in February to campaigners and said a Tory government would pay higher rates to those who had installed early. "You will be pleased therefore to hear that we have decided that if a Conservative government is elected, we would ensure that micro-generation equipment installed before feed-in tariffs come into effect will nevertheless be entitled to the same terms as new installations," he said in a letter.

But last week, answering Lucas in parliament, Huhne ruled out any such move. "I considered the issue carefully on a value-for-money basis, and I am afraid that the advice from my officials was clearly that we cannot introduce retrospection in such cases because it does not represent value for money," he said on Thursday. "We are trying to introduce new schemes in future, and therefore, sadly, the only incentive and payback that people such as the hon Lady and I will get is the warm glow of being pioneers."

Green campaigners condemned Huhne's decision.

Juliet Davenport, CEO at green electricity utility Good Energy, said: "The UK microgeneration industry owes its existence to these early adopters who installed their own generation equipment because they wanted to make a difference to climate change. Many invested their life savings in such schemes because they believed it was the right thing to do – and they deserve to be recognised and rewarded for their entrepreneurial attitude, not penalised."

Cathy Debenham, director of renewable energy website YouGen, said: "I think it's really disappointing because both parties made this promise. It's rather weak of him to blame this on officials at Decc, because Huhne could do it if he wanted to do."